How will the Fed contend with rising US borrowing costs?

Minutes from the Federal Reserve’s most recent meeting on monetary policy will be released on Wednesday, giving investors further insight into continuing debates at the central bank about the trajectory of the economic recovery and the recent rise in US borrowing costs.

The March meeting took place against a much-improved economic outlook. The $1.9tn stimulus programme passed by the Biden administration prompted a rethink about the recovery’s pace, with economists moving their growth and inflation forecasts substantially higher.

These revisions damped investors’ appetite to hold US government bonds, sending prices lower. Yields, which rise as prices fall, have surged higher, with the benchmark 10-year note now trading about 0.1 percentage point below its 14-month high of 1.78 per cent.